Food set to get more expensive for British shoppers

Food inflation jumped sharply in July and is likely to rise in the coming
months as pressures abroad push up the cost of fresh food.

Food inflation is expected to rise in the coming months.

By Angela Monaghan

6:00AM BST 04 Aug 2010

Annual food inflation jumped to 2.5pc from 1.7pc in June according to the British Retail Consortium/Nielsen shop price index, with the price of meat and fruit among the biggest risers.

"The recent dry weather has increased the price of animal feed and poor harvests have reduced some fruit crops," said Stephen Robertson, BRC director general. "Problems with production in large wheat exporting countries, such as Russia and Canada, could put pressure on overall food inflation in the coming months."

The report said that a drought in Australia, as well as floods in Canada, Pakistan and India had helped to drive up wheat prices by almost 50pc since June. It said the price of commodities including palm oil, cocoa, and soya oil had also risen sharply.

Despite the rise in food prices, overall shop price inflation was unchanged in July at 1.5pc, after non-food inflation slowed to 1pc from 1.4pc - the lowest level since November. Aggressive discounting explained the fall according to the BRC/Nielsen. Furniture and flooring prices fell for the first time in seven months.

Shop price inflation is therefore lower than the consumer prices index - the official measure of inflation - which was 3.2pc in June according to the latest available data. Mr Robertson said this made it clear that the high street is not the main source of CPI inflation, which has been above the 2pc target since November.